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Does "Vote No" Change Corporate Governance and Firm Value? Evidence from the Shareholder Activism of the Korean National Pension Service
- Authors
- Kim, Sungmin; Byun, Hee Sub; Lee, Eun Jung
- Issue Date
- Sep-2014
- Publisher
- M.E. Sharpe Inc.
- Keywords
- corporate governance; firm valuation; pension fund; shareholder activism
- Citation
- Emerging Markets Finance and Trade, v.50, no.5, pp.42 - 59
- Indexed
- SSCI
SCOPUS
- Journal Title
- Emerging Markets Finance and Trade
- Volume
- 50
- Number
- 5
- Start Page
- 42
- End Page
- 59
- ISSN
- 1540-496X
- Abstract
- In this paper, we analyze the effect of shareholder activism on firm value through internal corporate governance in an emerging market. We investigate the shareholder activism by the National Pension Service (NPS) of Korea, the fourth-largest pension fund in the world in 2010. We investigate stock price reaction to a "vote no" press announcement and find that the market does not react in the short run, which reaction is inconsistent with the results from developed countries. We also find that firms experiencing "vote no" and improved internal corporate governance have higher firm valuation. Shareholder activism by the NPS is effective in increasing target firm value through improving internal corporate governance.
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Related Researcher
- Lee, Eun Jung
- COLLEGE OF BUSINESS AND ECONOMICS (DIVISION OF BUSINESS ADMINISTRATION)